Global Crossing rallies on buzz deal will be approved soon; WorldCom debt glows from settlement

By Carlise Newman

Chicago, Sept. 10 - Global Crossing Inc.'s debt firmed further on Wednesday, rallying on reports that Singapore Technologies Telemedia's bid to buy the company could be approved as early as this week.

The state-owned telecom firm and U.S. officials reached an agreement on network security last Friday.

Telemedia agreed to pay $250 million for a 61.5 % stake in the bankrupt telecom carrier. The deal had earlier met with resistance from security officials on concerns about a foreign business buying an American firm that handles sensitive national security data.

The deal had been reviewed by the Committee on Foreign Investment, a panel representing different government agencies; it presented its views to U.S. President George W. Bush last week.

Global Crossing's bonds rose to 6 bid from 5 bid, 5 3/8 offered, a trader said.

"The bonds have been at 3, 4 bid for months now. This is the first action they've seen in a while," he said.

The president has up to Sept. 19 to decide on the deal. A report in the Wall Street Journal Tuesday said President Bush was likely to approve the Telemedia bid for Global Crossing.

Global Crossing had initially teamed up with Hong Kong-based Hutchison Whampoa Ltd., but Hutchison dropped out because of U.S. government concerns over its link with China.

WorldCom Inc. was, as one trader put it, "obviously" still very active Wednesday, one day after the company reached a settlement with two groups of creditors.

WorldCom bonds were up 1 point to 31¾ bid, 32 offered, a trader said, up from 31 bid, for a total of 5 points in two days. MCI paper was seen at 77½ bid, 78½ offered, up ½ point.

"You're not going to have news like that lose its glory in a day. They can probably coast on this for most of the week," he said.

Ashburn, Va.-based WorldCom reached an agreement with the creditor groups early Tuesday. Under the arrangement, holders of WorldCom senior debt - both bank debt and notes - which were to be repaid 36 cents per dollar for their claims, will now receive 52 cents on the dollar.

A second group that was also unhappy with the original plan will now be paid 44.5 cents on the dollar.

Meanwhile, HealthSouth Corp. bonds "bombed" Wednesday, according to a trader, on news that the government probe into the company's accounting issues has widened.

The 6 7/8 % notes due 2005 were quoted at 83 bid, 85 offered, 3 points lower when they were last seen trading Friday at 87 bid, 88 offered.

Congress said it is seeking records from three companies and a former employee of the Birmingham, Ala.-based healthcare provider.

The House of Representatives Energy and Commerce Committee said it sent letters seeking the records to former HealthSouth senior vice president Jason Hervey, as well as U.S. Strategies Corp. chief executive Eric Hanson, Fulbright & Jaworski chairman Steven Pfeiffer and Patton Boggs managing partner Stuart Pape.

Elsewhere, Conseco Inc. was "still busy, but not as much" as Tuesday, a trader said.

The extended bonds were quoted at 86 bid, and the unextended bonds were seen at 51½ bid. Both were up 4 points.

Conseco obtained court approval for its reorganization plan Tuesday, pushing the company closer to its emergence date.

"It doesn't really make sense that the paper would bid up today and not yesterday when the news was still fresh," a trader said. "It's kind of puzzling."

Conseco had struggled to come up with a reorganization plan that all creditors would approve. In late August, the company filed its fifth plan, which added a settlement with holders of the Trust Originated Preferred Securities that cleared the way for court approval.

Bankrupt cable television provider Adelphia Communications Corp.'s 9 7/8% notes due 2007 were seen at 67 bid, 68 offered, down ½ point, for a 1 point drop from Monday, according to sources.

Meanwhile, AK Steel Inc.'s 7¾% notes due 2012 were seen at 81 bid, 83 offered, a rise of 1 point.

Armstrong World Industries Inc. saw its bonds rise 2 points to 54 bid, 57 offered, a trader said. The bankrupt floor manufacturer faces a voting deadline on its reorganization plan on Oct. 17. The deadline had been extended from Sept. 22.

In other news, International Wire Group's 11¾% notes due 2005 were up 4 points to 60 bid. And Revlon Group's 8 5/8% notes due 2008 were seen up a point to 52 bid.

(Paul Deckelman contributed to this report)

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